I have been asked many times about rebuilding after the unexpected has happened. Let me ask three key questions.
- Is there anyone at all on whom you are at least partly financially dependent?
- What would happen if that person was no longer able to deliver their end?
- Are you prepared?
Well, contrary to popular belief, sometimes, life does give you a “do-over.” You might call me the women’s financial do-over. But the key to a “do-over,” is to do it over the right way. No matter what your lifestage, there are simple steps you need to follow to plan your financial future… over…
Let’s consider what women should be doing at various points in their life.
For those of you who are in your 20’s
- Remember the “save a penny for a rainy day” mantra, well start an emergency fund – you should have three to six months pay saved up in case you run into financial surprises. Surprises are.. after all… a surprise. But you can be prepared.
- I know you are not really thinking about retirement yet, but if your company offers a 401(k), sign up. Contribute at least the minimum percentage needed to qualify for the full employer match – you will get the most out of your employer benefits this way.
- Be financially prudent. Limit yourself to just one credit card, and pay the entire balance monthly. If you have an outstanding balance on credit cards, pay as much as you can as quickly as possible, starting with the highest interest card first
- Work on paying down any student loan debt
- And check your credit report to make sure there are no discrepancies – you would be surprised what can show up on your credit report that you are unaware of
For those of you in your 30’s
- Take a look at how your 401(k) or IRA money is being invested – a woman at your age may be able to afford more aggressive investments as you have many years before retirement
- If you’re buying a home, put 20% down to a void the cost of mortgage insurance. Your mortgage payment should be no more than 28% of your monthly income. These two benchmarks assure that you buy smartly
- Take out a disability income insurance policy if you don’t already have one, to protect you from the unexpected.
- Work with a lawyer to establish a will, and to address any other estate planning needs you may have. Working on your will is not only a way to address your estate planning, but will force you to answer some questions you don’t even realize are out there.
For those of you in your 40’s
- Review your life insurance policies to be sure you have the right amount of coverage and the right type as your needs may have changed. What we needed in our 30’s is not likely the same as what we need in our 40’s.
- Explore options for long term care insurance – buying young gives you more options for better coverage at better rates.
- Take a look at your 401(k) plan or IRA investments. Your investment objectives may have changed as your life has undoubtedly changed. Update your investments to better reflect your goals.
- Give your credit report another solid “once over” to be sure it reflects a true statement about your money management habits.
For those of you in your 50’s
- Revisit your retirement savings goal to make sure it still makes sense, and that you are on the right plan to reach that goal.
- If you are behind on savings, you can catch up by taking advantage of higher contribution limits in 401(k)s and IRAs.
- Review your estate plan to make sure it is up to date with changes in your life and current laws. Confirm you executors are the ones best suited to carry out your desires.
For those of you in your 60’s
- Consider your retirement income strategy. Determine whether you can live off of a small percentage of your retirement assets and continue investing the majority.
- If you earned a traditional pension, compare the payout options and make sure your choice doesn’t exclude you from other retiree benefits.
- Find out when you can receive your full Social Security benefit – you may want to hold off on collecting your benefit up to age 70 to increase your monthly payout.
- Get yourself ready to enjoy your upcoming retirement in every way, not just financially.
